To build a repeatable corporate risk framework, organizations look to international standards. The most widely adopted framework is ISO 31000: Risk Management – Guidelines. ISO 31000 defines risk simply as the effect of uncertainty on objectives, acknowledging that risk involves both potential downsides (threats) and upsides (opportunities). [1, 2, 3]
The Three Structural Pillars of ISO 31000
The ISO 31000 architecture is built around three core components that work together to guide an organization’s risk activities:
  1. Principles: The foundation of effective risk management. ISO 31000 states that risk management must create and protect value, be an integral part of all organizational processes, form part of decision-making, and explicitly address uncertainty. [1, 2]
  2. Framework: The structural governance model. It requires senior leadership commitment to integrate risk management into the corporate culture, design the oversight framework, implement risk plans, evaluate performance, and continuously improve.
  3. Process: The operational execution of risk management. This includes establishing the internal and external context, assessing risks (identification, analysis, and evaluation), treating risks, monitoring controls, and communicating findings across the firm. [1, 2, 3, 4]

 
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